Congress did not intend to link a physician’s entitlement to enhanced Medicaid payments for primary care services to her billing history, a district court held in a decision invalidating an HHS Final rule designed to implement Medicaid payment reforms in the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The court held the Tennessee Medicaid program could not use the rule as justification to recoup enhanced payments made to several Tennessee physicians and the case was remanded to CMS for additional proceedings (Averett v. HHS, January 24, 2018, Leitman, M.).

Statutes. Section 5501 of the ACA (42 U.S.C. §1395l(x)) established a Medicare Payment Statute designed to provide enhanced Medicare payments to "primary care practitioners." The statute defines primary care practitioners as physicians who (1) have a "primary specialty designation"; and (2) for whom primary care services accounted for at least 60 percent of the allowed charges" under Medicare during a certain period of time. Section 1202 of the Health Care and Education Reconciliation Act of 2010 (HCERA) (42 U.S.C. §1396a(a)(13)(C)) established a similar rule for Medicaid. The Medicaid statute authorizes enhanced payments to Medicaid physicians with "a primary specialty designation of family medicine, general internal medicine, or pediatric medicine." Notably, the Medicaid statute omits the 60-percent threshold language regarding a physician’s billing history.

Final rule. On November 6, 2012, CMS promulgated a Final rule (77 FR 66670) implementing the Medicaid payment statute (see CMS implements Medicaid payment increase for primary care, November 6, 2012). The Medicaid rule requires physicians seeking enhanced payments to (1) be board certified in certain specialties; or (2) "furnish evaluation and management services and vaccine administration . . . that equal at least 60 percent of the Medicaid codes he or she has billed during the most recently completed calendar year."

CMS expressed that it included the 60-percent billing threshold because Congress included a 60-percent billing threshold in the Medicare statute. Commenters on the Medicaid Final rule objected to this reasoning noting that Congress did notinclude such a threshold in the Medicaid statute—signifying congressional intent to make the enhanced Medicaid payments available regardless of whether physicians met historical billing metrics.

Enhanced physician payments. Several primary care physicians participating in the Tennessee Medicaid program (TennCare) asserted that they were eligible for enhanced Medicaid payments in 2013 and 2014. Although none of the physicians were board certified, they asserted that they had "primary specialty designations" and satisfied the 60-percent billing threshold. However, TennCare conducted an audit in 2015 which revealed that the physicians did not satisfy the 60-percent billing requirement. The physicians filed suit against HHS alleging that the Final rule is invalid and that they are entitled to enhanced payments. Specifically, the physicians alleged that the 60-percent threshold requirement runs counter to the text, purpose, and legislative history of the statute, rendering the rule arbitrary and capricious.

Statutory construction. The court held that the Medicaid statute’s limitation of enhanced payments to Medicaid physicians with "a primary specialty designation of family medicine, general internal medicine, or pediatric medicine" signaled that Congress did not wish to tie the enhanced Medicaid payments to billing metrics. The court called the conclusion "inescapable" when construed alongside the context of the combined ACA and HCERA—specifically, the fact that the Medicare statute included the specialty designation language as a separate and distinct requirement from a physician’s billing metrics whereas the Medicaid version did not. The court explained that Congress would not have included both requirements in the Medicare statute if the term "primary specialty designation" already included a consideration of billing metrics. Thus, the fact that the Medicaid statute included only the "primary specialty designation" and not the 60-percent threshold language demonstrated that Congress did not intend to tie the enhanced Medicaid payments to physician billing. In effect, by drafting the Medicare and Medicaid statutes differently, Congress said that CMS could not consider a physician’s billing history for purposes of the enhanced Medicaid payments.

Invalidation. The court next addressed the question of the proper remedy, holding that it could not, in the absence of the billing threshold, affirm the provision of the rule tying "primary specialty designation" to a physician’s board certification. The court reasoned that it had to invalidate the entire rule. The court pointed to the fact that CMS indicated during the notice-and-comment period that it would not have adopted a rule establishing board certification as the sole path to a "primary specialty designation."

Remand and payments. The court remanded the case to CMS for further proceedings. Additionally, the court concluded that TennCare was not entitled to recoup enhanced payments made to the physicians on the ground that physicians were ineligible for those payments under the rule.